Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Wong. The Prime Minister recently announced that small businesses will receive favourable capital gains tax treatment if they are classified as innovative. Can the minister advise what a cafe would need to do to qualify as innovative? Would a cafe that introduces a new type of coffee on its menu or creates a new breakfast item, or adds a QR code to its menu be classified as innovative and receive favourable tax treatment?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

I thank Senator Hume for her question. As you know, on budget night, the Treasurer announced a process of consultation on a number of aspects of these very ambitious and substantial tax reforms. They are ambitious and they are substantial because we know the status quo is not working for Australians or for the Australian economy. Consistent with what the Treasurer announced on budget night, the government has worked through a series of consultations, not only with small business—and that has resulted in some changes—but also in relation to the startup sector, where the government has made clear through the release of a consultation paper entitled 'Capital gains tax reforms arrangements for innovative startups' that we are open to a discussion.

Sue Lines (President) | Link to this | Hansard source

Senator Wong, please resume your seat. Senator Hume on a point of order?

Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) | Link to this | Hansard source

I rise on a point of order on relevance. I asked about a cafe and what it would need to do to be considered innovative.

Sue Lines (President) | Link to this | Hansard source

Thank you, Senator Hume. I've been listening very carefully and the minister is being relevant to your question. Minister Wong, please continue.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

In relation to small business, the deputy leader of the opposition would be aware that the government has maintained the four existing tax concessions for small business and has, in fact, in relation to one of those tax concessions, raised the threshold so that more small businesses will be eligible for this concession, and this was after substantial consultation with the small-business sector. So I would suggest to the deputy leader I realise that those opposite are so worried about One Nation that they are not actually focused on policy that's good for the country. But what we have put in place is a set of reforms which are necessary for the benefit of the economy, of business and of working people.

Sue Lines (President) | Link to this | Hansard source

Senator Hume, on a first supplementary?

Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) | Link to this | Hansard source

Clearly, there's no answer for the cafe. What about other businesses? Under the Prime Minister's new policy of classifying small businesses as innovative to receive favourable capital gains tax treatment, what, for instance, would a hairdresser need to do to be classified as innovative? Is there a way for an innovative hairdresser to claim the capital gains tax discount?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

There is a serious issue about ensuring that startups and biotech thrive in this country. We said that we would consult in recognition of the unique characteristics of these highly innovative businesses. For the discussion paper to which I alluded, I think submissions are open, from memory, until about 10 or 11 July. Submissions can be made in respect of that.

In relation to small business, I refer to my earlier answer, where, as a result of consultation with the small-business sector, the government has lifted the threshold on one of the key tax concessions for small businesses so that more small businesses will be eligible for concessions.

Sue Lines (President) | Link to this | Hansard source

Senator Hume, a second supplementary?

Jane Hume (Victoria, Liberal Party, Shadow Minister for Employment and Industrial Relations) | Link to this | Hansard source

Can the minister then explain who will make the determination as to whether a small business is considered sufficiently innovative, what guidance will be provided to businesses and investors on this, and whether businesses will be able to challenge a decision that they are not sufficiently innovative—like this cafe, like this hairdresser—to qualify for that capital gains tax discount.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

The point I would make, and I'd again make it, but I think the deputy leader is deliberately not recognising what is—

Michaelia Cash (WA, Liberal Party, Leader of the Opposition in the Senate) | Link to this | Hansard source

She's deliberately asking questions on behalf of small business.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

No, I think she's deliberately not interested in my response. We are delivering about $3.8 billion in new business tax relief measures. This includes the $20,000 instant asset write-off, making that permanent; a permanent two-year loss carry-back for companies with turnover up to $1 billion—

and increasing the turnover for the existing 50 per cent active asset reduction CGT concession from $2 million to $10 million—in other words, enabling more small businesses to gain that concession. There is a separate process around innovative businesses. You are deliberately bringing them together in order to try and make mischief and we all understand that.

Karen Grogan (SA, Australian Labor Party) | Link to this | Hansard source

My question is to the Minister for Finance, Senator Gallagher. Last month, the Treasurer handed down the Albanese Labor government's fifth budget, which supports Australians through the global oil shock while delivering a fairer housing market, a more productive economy and a better tax system. Can the minister outline how this responsible, reforming budget is supporting Australians under pressure and setting the country up for the future?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) | Link to this | Hansard source

I thank Senator Grogan for that question. This is a responsible budget that is focused on relief, resilience and reform. The conflict in the Middle East is weighing heavily on our economy and compounding cost-of-living pressures facing Australians, so we're delivering more cost-of-living help and building a more productive economy, a fairer housing market and a stronger and more sustainable budget. We're reforming the tax system for workers, businesses and future generations, and our tax reforms have three goals: to level the playing field and better align the tax treatment of income from work with income earned in other ways; to help more Australians recognise the dream of homeownership and get a foothold in the property market; and to improve productivity by encouraging innovation and investments.

Our reforms will build a better, fairer and simpler tax system by reducing the tax burden for over 13 million workers, supporting 75,000 more first home owners into the housing market, delivering over $3.8 billion in new measures that lower taxes for small businesses and startups, and reducing compliance costs by $540 million a year. This tax package is pro aspiration, pro worker and pro investment. It builds on our reforms to date, including three rounds of tax cuts, making super fairer and more sustainable and making multinationals pay a fair share of tax.

On 1 July this year, over 14 million Australians will get another tax cut of up to $268. Our combined tax cuts mean a worker on average wages will pay up to $2,800 less tax than what we inherited. The Liberals and the Nationals tried to increase income taxes at the last election, and now they're defending the status quo, which punishes workers and locks too many people— (Time expired)

Sue Lines (President) | Link to this | Hansard source

Senator Grogan, first supplementary?

Karen Grogan (SA, Australian Labor Party) | Link to this | Hansard source

Thank you to the minister. That's very informative. Last week, following consultation, the Prime Minister and the Treasurer announced further details of the government's tax reform package, extending the small business capital gains tax discount to 2.7 million small businesses and backing innovative startups. Can the minister outline how these changes give small businesses greater clarity and confidence, while still making the tax system fairer?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) | Link to this | Hansard source

I thank Senator Grogan for that supplementary. As Senator Grogan outlined, the Prime Minister and Treasurer did announce further implementation details for the government's tax reform package. We had flagged, in the budget papers and on budget night, that there would be further work done to consult with the startup sector about how these changes could most appropriately apply to them. We said we would do that. We said we would consult with small business. We said we would consult with startups. We have done that.

We have increased the threshold from $2 million to $10 million for the 50 per cent tax discount for small businesses. It means that all 2.7 million active small businesses and 98 per cent of all active businesses will be eligible for generous CGT concessions. Consultation is now open on the Innovative Business CGT Concession. There are more discussions to be done. That consultation paper is out for the next three weeks.

Sue Lines (President) | Link to this | Hansard source

Thank you, Minister. Senator Grogan, second supplementary?

Karen Grogan (SA, Australian Labor Party) | Link to this | Hansard source

This budget is designed to support Australians facing cost-of-living pressures while continuing responsible budget repair. How do the measures in the budget support Australian households, and how does this build on other cost-of-living measures that the Albanese Labor government has already delivered?

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) | Link to this | Hansard source

I thank Senator Grogan for that question. The Albanese government has been focusing on the cost of living since we came to government, whether it be in energy bill relief, whether it be in Medicare urgent care clinics, whether it be in cheaper medicines, whether it be in our investments in bulk-billing—all of those. And, of course, the tax cuts—those opposite hate hearing about tax cuts because they remember that they went to the last election promising to hike everyone's tax. That was a stroke of genius from those over there who went and thought about it and thought: 'You know what? We're going to go and fight an election by taking tax rises to the people and seeing what they say.' They oppose the tax cuts that we are making and that we are providing on 1 July this year. Working Australians will get a further tax cut. There's the instant deduction and there's the working Australians tax offset to come into place as well.

Michaelia Cash (WA, Liberal Party, Leader of the Opposition in the Senate) | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Wong. Will the government's innovative-business carve-out apply at the time a business is founded, when shares are issued, when an investment is made, when an employee share scheme is granted or only years later when a capital gain is realised?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

As the senator would know—

Michaelia Cash (WA, Liberal Party, Leader of the Opposition in the Senate) | Link to this | Hansard source

I don't; that's why I'm asking you.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

Well—

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) | Link to this | Hansard source

Where's Anne? That's what I'd like to know.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

Where is Senator Ruston, by the way? For the benefit of the Leader of the Opposition in the Senate, I said this in response to the Deputy Leader of the Opposition in the Senate—an opposition who, of course, went to the election with higher taxes. I explained that there were two tranches of changes. The first is in relation to small business. We have lifted turnover to $10 million so that 2.7 million active small businesses and 98 per cent of all active businesses will be eligible for generous capital gains tax concessions. In relation to the innovative-startup measures—and as I also explained to the deputy leader—the Treasurer, through the Treasury, is engaging in consultation. A consultation paper was released on 18 June. It goes through various arrangements for innovative startups, and the government will obviously have those consultations in good faith and bring forward those amendments as and when necessary.

Sue Lines (President) | Link to this | Hansard source

Senator Cash, second supplementary?

Michaelia Cash (WA, Liberal Party, Leader of the Opposition in the Senate) | Link to this | Hansard source

If eligibility is assessed years after an investment is made, how are founders, employers and investors supposed to price in risk today?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

I certainly would be advising Australian business to price in the risk of a coalition-One Nation government because we all understand what that would mean for business, working people and the Australian economy. That is a risk they should price in. They should work with the Labor Party to ensure that that is never delivered—that they never deliver a government—because we know what that side would be like if we saw Senator Cash and Senator Hanson working together in this chamber to take away so many of the things that Australians need.

What I would say to you, Senator, again—and as I explained in my primary answer to your deputy leader—is that the government is consulting on arrangements for innovative startups. That consultation will proceed in relation to small business. The government has announced a higher threshold, so 98 per cent of all active businesses will now be eligible for more generous CGT concessions.

Sue Lines (President) | Link to this | Hansard source

Thank you, Senator Wong. Senator Colbeck, withdraw the comment you made during Senator Wong's contribution. I caution all senators about using that word in here.

Richard Colbeck (Tasmania, Liberal Party) | Link to this | Hansard source

I withdraw.

Sue Lines (President) | Link to this | Hansard source

Thank you, Senator Colbeck. Senator Cash, second supplementary?

Michaelia Cash (WA, Liberal Party, Leader of the Opposition in the Senate) | Link to this | Hansard source

Given the minister's inability to answer either the Deputy Leader of the Opposition in the Senate's questions or my questions—isn't this exactly the uncertainty that startups are warning about? The government announces a toxic tax, fails to define the carve-out and leaves founders and investors to guess whether they'll be punished years down the track.

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) | Link to this | Hansard source

I would say to the Leader of the Opposition in the Senate that, if you want an example of chaos and uncertainty, it is the federal coalition.